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exception does not apply if the

return) for the tax year that includes

additional sheets. Instead, complete

distribution is of stock or securities of

the date of the transfer.

all entry spaces in the section and

a foreign controlled corporation to a

attach the remaining information on

Other Forms That May Be

distributee shareholder who is not a

additional sheets. The additional

Required

U.S. citizen or resident or a domestic

sheets must conform with the IRS

Persons filing this form may be

corporation.

version of that section.

required to file FinCEN Form 114,

3. A U.S. person that transfers

Part I—U.S. Transferor

Report of Foreign Bank and Financial

stock or securities under section

DRAFT AS OF

Accounts (FBAR).

Information

367(a) does not have to file Form 926

if either a or b below applies.

A U.S. transferor that is required to

Identifying Number

enter into a GRA under section 367 to

a. The U.S. transferor owned less

The identifying number of an

qualify for nonrecognition treatment

than 5% of both the total voting power

individual is his or her social security

must file Form 8838, Consent To

and the total value of the transferee

number (SSN). The identifying

January 28, 2015

Extend the Time To Assess Tax

foreign corporation immediately after

number of all others is their employer

Under Section 367—Gain

the transfer and:

identification number (EIN).

Recognition Agreement, to extend the

The U.S. transferor qualified for

statute of limitations with respect to

Line 1a. If you answered “Yes” to

nonrecognition treatment with respect

the gain realized but not recognized

question 1a and the asset is a tangible

to the transfer, or

on the transfer.

asset, section 367(a)(5) may require

The U.S. transferor is a tax-exempt

basis adjustments. If you answered

entity and the income was not

Penalties for Failure to File

“No” to question 1a and the asset is a

unrelated business income, or

If a taxpayer fails to comply with

tangible asset, the transfer is taxable

The transfer was taxable to the U.S.

section 6038B, the penalty equals

under sections 367(a)(1) and (a)(5). If

transferor under Regulations section

10% of the fair market value of the

the asset transferred is an intangible

1.367(a)-3(c) and such person

property at the time of the transfer.

asset, see section 367(d) and its

properly reported the income from the

The penalty will not apply if the failure

regulations.

transferor on its timely filed return

to comply is due to reasonable cause

(including extensions) for the tax year

If you answered “No” to question

and not to willful neglect. The penalty

that includes the date of transfer, or

1a: If the U.S. transferor is owned

is limited to $100,000 unless the

The transfer is considered to be to

directly by more than five domestic

failure to comply was due to

a foreign corporation solely by reason

corporations immediately before the

intentional disregard. Moreover, the

of Regulations section 1.83-6(d)(1)

reorganization, but some combination

period of limitations for assessment of

and the fair market value of the

of five or fewer domestic corporations

tax upon the transfer of that property

property transferred did not exceed

controls the U.S. transferor, the U.S.

is extended to the date that is 3 years

$100,000.

transferor must designate the five or

after the date on which the information

fewer domestic corporations that

b. The U.S. transferor owned 5%

required to be reported is provided.

comprise the control group. List these

or more of the total voting power or

Section 6662(j) Penalty

designated corporations on Form 926,

the total value of the transferee

line 1b.

For tax years beginning after March

foreign corporation immediately after

18, 2010, a 40% penalty may be

the transfer and:

Line 1b. If the transferor went out of

imposed on any underpayment

The U.S. transferor is a tax-exempt

existence pursuant to the transfer (for

resulting from an undisclosed foreign

entity and the income was not

example, as in a reorganization

financial asset understatement. No

unrelated business income, or

described in section 368(a)(1)(C)), list

penalty will be imposed with respect

The transfer was taxable to the U.S.

the controlling shareholders and their

to any portion of an underpayment if

transferor and such person properly

identifying numbers.

the taxpayer can demonstrate that the

reported the income from the transfer

Line 1c. If the transferor was a

failure to comply was due to

on its timely filed return, or

member of an affiliated group filing a

reasonable cause with respect to

The transfer is considered to be to

consolidated tax return (see sections

such portion of the underpayment and

a foreign corporation solely by reason

1501 through 1504), but was not the

the taxpayer acted in good faith with

of Regulations section 1.83-6(d)(1)

parent corporation, list the name and

respect to such portion of the

and the fair market value of the

EIN of the parent corporation and file

underpayment. See sections 6662(j)

property transferred did not exceed

Form 926 with the parent

and 6664(c) for additional information.

$100,000.

corporation's consolidated return.

When and How To File

Specific Instructions

Line 1d. If the answer to line 1d is

"Yes," and if the asset is transferred in

Form 926 (and the additional

Important: All information reported on

an exchange described in section

information required under

Form 926 must be in English. All

361(a) or (b), attach the following.

Regulations section 1.6038B-1(c) and

amounts must be stated in U.S.

A statement that the conditions set

Temporary Regulations sections

dollars. If the information required in a

forth in the second sentence of

1.6038B-1T(c)(1) through (5) and

given section exceeds the space

section 367(a)(5) and any regulations

1.6038B-1T(d)) must be filed with the

provided within that section, do not

under that section have been

U.S. transferor's income tax return (or,

write “see attached” in the section and

satisfied.

if applicable, exempt organization

then attach all of the information on

-2-

Instructions for Form 926 (Rev. 01-2015)

Instructions For Form 926 Draft - Return By A U.s. Transferor Of Property To A Foreign Corporation Page 3

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